Bunting v. Creglow

168 N.W. 727 | N.D. | 1918

Lead Opinion

Birdzell, J.

(after stating the facts). The trial court found that Anderson was the agent of the defendants Oreglow, Gibbs, and Kelley, and that they were consequently bound by the representations that he made. The appellants’ counsel challenges this finding and contends that, under the facts disclosed by the record and the testimony given, the plaintiff has not sustained the burden of proving the agency to exist. In answer to this contention it need only be stated that the record clearly establishes that Anderson negotiated the deal, and it makes no difference whether he was originally authorized by the defendants to sell the land or not. Having taken the benefits of the contract negotiated by Anderson, they must be held'to have assumed its burdens and to be bound by whatever representations were made inducing the plaintiff to contract. This proposition is so elementary that the citation of authorities is unnecessary. However, it is contended, in opposition to the principle stated, that, under §§ 6330 and 6331 of the Compiled Laws of 1913, an oral ratification is not sufficient. Section 6330 provides that an oral authorization (of an agent) is sufficient for any purpose, except that an authority to enter into a contract, required by law to be in writing, can only be given by an instrument in writing. Section 6331 provides that a ratification can bo made only in the manner that would bo necessary to confer original authority for the “act ratified or, when an oral authorization would suffice by accepting or retaining the benefit of the act with notice thereof.” Counsel argues that these statutes are merely declaratory of the pre-existing common law. In this respect counsel are clearly in error, for it has long been well established that the provisions of the Statute of Frauds, requiring contracts for the sale of an interest in lands to be in writing, have no effect whatsoever upon an agency contract, and that any authorization of an agent which was sufficient under the common law would he sufficient to authorize him to execute a contract binding his principal for the sale of the lands. This rule is distinctly ■changed by § 6330, above referred to. But we need not determine in this case whether the ratification is sufficient to hold the defendants bound to their contract. This is not an action to enforce an executory contract for the sale of the lands. The contract is executed and the action is one to escape its consequences on the ground that it was induced by fraudulent representations. The Statute of Frauds has no application to an executed contract. It is only when an attempt is made to hold one bound to a contract within its terms that its provisions are applicable. Brown, Stat. Fr. §§ 116, 111. If counsels’ position were correct, it is clear that the Statute of Frauds would become a most convenient instrument for the perpetration of fraud,, instead of a means for its prevention.

It is next argued that none of the defendants made any statements or representations which would justify a rescission of the contract. This argument depends, in part at least, upon the effect .of the ratification of Anderson’s agency. The effect of that ratification being as above indicated, this argument does not go far enough, because the defendants are bound by Anderson’s representations regardless of any representations that might or might not have been made by them personally.

It is next urged that, even assuming that the representations were made as claimed, the evidence of reliance by the plaintiff upon them was not sufficiently convincing to justify a rescission of the completed transaction, and also that the plaintiff is estopped by his own representations of nonreliance in the written contract. There are some circumstances tending to indicate that the plaintiff relied upon his own inspection of the land to determine its quality, such as the fact that he had asked Creglow to warrant that the lands were clay, and Creglow had refused, and that he had gone to upper Michigan and investigated the lands; but these are explained. He says that the investigation was for the purpose of determining the lay of the land, and not its quality; and the fact that the inspection was made during the winter season when the land was covered with snow, together with the extreme care which was apparently exercised to prevent the plaintiff from obtaining a correct impression as to the condition of the soil, tends to destroy the effect of the inspection by the plaintiff, and to indicate that he was in fact relying upon the subtle representations of Anderson and his coagents in the deal. We are impressed that the findings of the trial court upon this question are substantiated by the circumstances disclosed by the record, and by the weight of the testimony.

In the contract which plaintiff signed with the Upper Michigan Land Company, the following clause appears: “The said party of the second part hereby agrees and warrants, as a part of the consideration of the sale to him of said land, that he has inspected said premises, on his own behalf, and that in making this purchase and in executing this contract he is not relying upon any representations made by the party of the first part or by any agent or servant thereof, and explicitly waives any claim on that account.” The presence of the foregoing-clause in the contract tends rather to cast suspicion upon the transaction than to stamp it with the seal of fairness and good faith. It docs not strengthen the legal position of the vendors of the land to so express the doctrine of caveat emptor as to make it appear that the purchaser warrants as a part of the consideration that he has inspected the premises. In so far as the above provision may amount to a release defeating the legal consequences of actual fraud before its presence has become known to the party signing it, it may properly be regarded as of no effect in law. Furthermore, it is not apparent how the answering defendants can derive any benefits from this clause in the contract with the Upper Michigan Land Company. It is not claimed that there was any such clause in the first contract that was executed.

It is next claimed that the Upper Michigan Land Company is an indispensable party to a proceeding in which it might be sought to rescind the contract under which the conveyance of plaintiff’s land was made, and that the jurisdiction over the answering- defendants Creglow, Kelley, and Gibbs, is not sufficient to warrant the exercise of the equitable power’s of the court to secure the complete undoing of the transaction. If the appellants’ contention were correct in this respect, it would follow that the state courts would be powerless to grant relief in any ease where the defendant is a nonresident, even if there were bnt two parties to the transaction, one of which is a nonresident.

The contention altogether overlooks the fact that the powers of the courts of equity are now generally coextensive with the subject-matter of the litigation, and that their judgments and decrees may be given full effect by direct action upon any subject-matter that is within their jurisdiction. Equity jurisdiction can no longer be said to be exercised strictly in personam. It is at least quasi in rem. See Pom. Eq. Jur. §§ 135, 171, 428, 1317, and 1318. It appears that all necessary parties have been made parties defendant; that three of the defendants appeared voluntarily; and there is a finding, not controverted, that the Upper Michigan Land Company was “duly served.” The question raised, therefore, must be determined not upon the basis that the foreign corporation, which was a party to the contract, was not made a party to the action; but rather upon the basis that all of the parties to the contract were joined as parties defendant, that the court had personal jurisdiction over three of the defendants and jurisdiction over the fourth defendant by publication in pursuance of the order entered to that effect.

In the existing state of the record as to parties, no question is raised as to the right of the plaintiff to enforce the judgment as a personal judgment against a nonresident party served only by publication. The doctrine of Pennoyer v. Neff, 95 U. S. 714, 24 L. ed. 565, is consequently not applicable. Furthermore, the plaintiff is the party prejudiced by the inability of the court to render a judgment binding as a personal judgment or decree against the nonappearing defendant rather than such defendant.

Neither does the record present a case strictly analogous to that of Shields v. Barrow, 17 How. 130, 15 L. ed. 158; for, as above indicated, all of the parties to this contract have been made parties defendant, which was not true in the case of Shields v. Barrow. In the opinion in that case, Mr. Justice Curtis indicated that the rule applied as to parties would not necessarily be fatal to the action if the indispensable parties were constructively before the court. In referring to the Act of Congress of February 28, 1839, regulating the equity practice of the circuit court of the United States, he quoted with approval the previous decision of the court in Mallow v. Hinde, 12 Wheat. 198, 6 L. ed. 600, dealing with the question as follows: “The act says it shall be lawful for the court to entertain jurisdiction; but, as is observed by this court in Mallow v. Hinde, supra, 198, when speaking of a case where indispensable parties were not before the court, 'We do not put this case upon the ground of jurisdiction, but upon a much broader ground, which must equally apply to all courts of equity, whatever may be their structure as to jurisdictions; we put it on the ground that no court can adjudicate directly upon a person’s right, without the party being either actually or constructively before the court ’ ”

In the case at bar, all of the parties to the contract have been made defendants, and all are either actually or constructively before the court. Not being concerned in this proceeding with any question as to the plaintiff’s ability to make the decree wholly effective in so far as it may be favorable to him, it is clear that the court had jurisdiction of the subject-matter of the action and sufficient jurisdiction over all of the parties to enter an appropriate judgment; The judgment was in every way proper in that it required the plaintiff to surrender all the benefits that he had received under the contract, and to assign it so that the defendants would be free to adjust their rights as between themselves. If the defendants, or any of them, do. not care to come in and assert their interest in the contract thus assigned, or the rights that may have been theirs inter sese, they are in no position to complain of the' decree. It is not enough that one or more defendants say that the judgment is wrong because the original status has not been completely restored. They must, at the same time, show wherein they are prejudiced. It is not claimed that the plaintiff has not completely surrendered the benefits that he had received; nor is it contended that the restoration is not complete in so far as he is able to make it complete. If the nonappearing defendant is a bona fide assignee of Creglow’s contract, it has not availed itself of its opportunity, to show such fact; and if the appearing defendants are prejudiced by reason of payments made to the Upper Michigan Land Company to induce it to contract with Bunting, they should rather be required to establish the exact extent of the prejudice than permitted to use the mere possibility of prejudice as a shield to protect them against the consequences of their own fraud.

The judgment is in all things affirmed.

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Concurrence Opinion

Robinson, J.

(concurring). Defendants appeal from a judgment for the rescission of a land trade on the ground that it was obtained by fraud and false representations. Under the statute a party may rescind a contract when his consent was given by mistake or obtained by fraud or undue influence. In this case it appears beyond all question that the defendants Creglow, Gibbs, and Kelley contrived to “gold brick” the plaintiff. By gross fraud, misrepresentations, they induced him to convey to Gibbs 1,120 acres of good land in Bowman county at $35 an acre, amounting to $39,200, in exchange for 2,320 acres of white sand land in twp. 45, range 4, of Upper Michigan peninsula. They claimed to have a contract with the Upper Michigan Land Company to sell them the land at $20 an acre, amounting to $46,400, and that on the contract (which plaintiff had never seen), the balance due was $7,888. This balance the plaintiff assumed and they paid him the difference, $688.

The original contract between the plaintiff and the defendant was dated February 10, 1915, and signed by Charles Creglow and the plaintiff. Creglow agreed to assign to plaintiff a contract for the sale of the land by the Upper Michigan Land Company, subject to the payment of $7,888, which plaintiff assumed. Creglow agreed to give plaintiff a copy of his contract with the Michigan Land Company, but afterwards, when a copy was demanded, Creglow claimed that it included other lands. Hence, to replace the first contract he volunteered to give plaintiff a contract direct from the Michigan Land Company. The new contract was given and dated March 1, 1915, and it contained this clause: “The party of the second part (the plaintiff) agrees and warrants that he has inspected the premises, and that in making the purchase and agreement he is not relying upon any representations made by the first party or any agent or servant thereof, and expressly waives any claim on that account.”

As such a clause is never found in an honest contract, it is strong evidence of the alleged fraud. The party who dictated that clause knew that misrepresentations had been made, and desired to hedge against the same. To put such a clause in a contract is like an ostrich putting his head in the sand to hide its body.

In the brief of counsel for appellant, it is said that to induce the Michigan Land Company to contract with the plaintiff to convey the land to him in consideration of $9,860, Gibbs, Kelley, and Creglow must either have paid or agreed to pay the difference between that and $46,400. That' argument assumes that the judges are very simple and easily hoodwinked, but we conceive it quite possible and even probable that Gibbs, Kelley, and Creglow were part of the Michigan Land Company, or that they stood in with it, and that they never made a- good-faith contract to purchase the land for $46,400. Such a representation was merely a bait for suckers like the plaintiff, but Gibbs and Company were not suckers. They never agreed to purchase’ a worthless lot of white sand at $46,400. These three real defendants employed W. G. Anderson, of St. Paul, to aid them in making the contract. He kept after the plaintiff week after week for three months, assuring him that the Michigan land had a good clay subsoil, and that said lands were fully as good as land near Sault Ste. Marie, which the plaintiff had seen and knew to be well worth $25 to $30 an acre.

In February, 1915, before making the trade, one of the defendants took plaintiff to see the land, and he passed an hour in trying to go over the land on snow shoes, but in June, 1915, he went over the land with the county surveyor, and they passed three days in digging holes into each 40-acre tract. They dug 200 holes and found nothing only white sand. The testimony of the surveyor is absolutely conclusive, and it shows that the land was worthless. It is needless to cite and to argue the evidence. The case is too plain. When it appears that a party has made a contract which no person of common sense would make if correctly informed, the fair presumption is that he was induced to make such contract by fraud and misrepresentations. The plaintiff has fully complied with all the conditions necessary to a rescission of the deal. Really it does seem that counsel should know better than to appeal such a case as this.

Judgment affirmed.